Callaway 2010 Annual Report Download - page 111

Deferred tax assets and liabilities are classified as current or noncurrent according to the classification of the
related asset or liability. Significant components of the Company’s deferred tax assets and liabilities as of
December 31, 2010 and 2009 are as follows (in thousands):
December 31,
2010 2009
Deferred tax assets:
Reserves and allowances not currently deductible for tax purposes ............... $18,113 $ 16,611
Basis difference related to fixed assets ...................................... 18,372 21,480
Compensation and benefits ............................................... 4,550 4,453
Basis difference for inventory valuation .................................... 3,549 3,700
Compensatory stock options and rights ..................................... 9,471 6,169
Deferred revenue and other .............................................. 2,292 2,777
Operating loss carryforwards ............................................. 4,766 3,399
Tax credit carryforwards ................................................ 8,124 4,772
Other ................................................................ — 76
Total deferred tax assets ..................................................... 69,237 63,437
Valuation allowance for deferred tax assets ...................................... (1,704) (2,504)
Deferred tax assets, net of valuation allowance ................................... 67,533 60,933
Deferred tax liabilities:
State taxes, net of federal income tax benefit ................................. (3,827) (2,253)
Prepaid expenses ....................................................... (2,086) (2,174)
Other ................................................................ (138) —
Basis difference related to intangible assets .................................. (26,618) (26,010)
Net deferred tax assets ...................................................... $34,864 $ 30,496
The current year change in net deferred taxes of $4,368,000 is comprised of a net deferred expense of
$52,000 related to ASC Topic 740-25-6 reserves offset by a net deferred benefit of $4,420,000 recorded through
current income tax expense for the year ended December 31, 2010.
The Company has federal and state income tax credit carryforwards of $2,239,000 and $5,885,000
respectively, which will expire at various dates beginning in 2011. Such credit carryforward expire as follows:
State investment tax credits ............................................. $ 255,000 2011
U.S. foreign tax credit ................................................. 1,464,000 2020
U.S. research tax credit ................................................ 775,000 2030
State investment tax credits ............................................. 1,618,000 Do not expire
State research tax credits ............................................... 4,012,000 Do not expire
The Company has recorded a deferred tax asset of $4,766,000 reflecting the benefit of operating loss
carryforwards. The deferred tax assets expire as follows:
State loss carryforwards ................................................. $ 883,000 2011 - 2030
Foreign loss carryforwards .............................................. 492,000 2019
State loss carryforwards ................................................. 3,391,000 2033
Deferred tax assets and liabilities result from temporary differences between the financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax rates and laws that are anticipated to be in
effect at the time the differences are expected to reverse. The realization of the deferred the tax assets, including
the loss and credit carryforwards listed above, is subject to the Company generating sufficient taxable income
during the periods in which the temporary differences become realizable. The Company maintains a valuation
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